Google Checkout Tries To Ring Up Market-Share Gains With Free Transactions

It must be the holidays. Just as it did last year, Google Checkout is trying to pay for market share in online payments. It is extending a “free transaction processing offer” until February 1, 2008. That means any merchant who uses Google Checkout, as opposed to Paypal, won’t have to pay any fees for items bought through Google’s payment service. Since Google is still eating the related Visa and Mastercard fees, it is clearly taking a loss here to gain market share.

This is a common tactic for Google, which has tried to to buy market share in other struggling areas as well, like its radio ads. With Google Checkout, the company is also leveraging the popularity of AdWords. After the free period is over, for every $1 that a merchant spends on AdWords, he will get $10 worth of Google Checkout sales processed for free. Google is using its dominance in search and search advertising to subsidize and break into other markets. That becomes easier to do as Google’s search market share keeps rising (comScore has it at 58.5 percent for October, Hitwise says 65 percent for November). Someone call the antitrust lawyers.

Below is an an e-mail sent to Google Checkout members yesterday:

From: “Google Checkout Team”
Date: December 11, 2007 12:47:57 PM PS

Subject: Update on Google Checkout transaction processing fees

Hello,

We’re writing to let you know that Google Checkout’s free transaction
processing offer has been extended to February 1, 2008. At that time,
Google Checkout will be transitioning back to its standard fee
structure.

You will still be able to earn free transaction processing if you use
Google AdWords – for every $1 you spend on AdWords, you will be able
to process $10 of sales through Checkout for free. For additional
sales, you’ll be charged a low 2.0% plus $0.20 per transaction. Fees
are the same for all payment types (Visa, MasterCard, American
Express, and Discover) and there are no monthly, setup, or gateway
fees. To learn more about Google Checkout fees, visit

http://checkout.google.com/seller/fees.html

If you’re an AdWords advertiser, make sure you link your AdWords
account with Checkout to earn free transaction processing. When you
link by February, 2008, your AdWords spend from January will count
towards free processing in February.

For instructions on how to link your account, go to

http://checkout.google.com/support/sell/bin/answer.py?answer=80154&topic=13456

If you’ve already done so, you might want to check that you’ve linked
to the correct AdWords account. Just log in to your Checkout account
at http://checkout.google.com/sell/ click on the ‘Settings’ tab and
click on the ‘AdWords’ link at the left of the screen. Note that your
Checkout and AdWords accounts must be based on the same currency in
order to be linked.

If you’re not yet a Google AdWords advertiser, you can learn more or
open an account at http://www.google.com/ads/adwords_checkout/ Google
AdWords can help grow your business by connecting you with customers
just as they are searching online for what you sell. With AdWords,
you’re always in control of your budget and you’ll pay only when
people click on your ads.

Please visit our Help Center at
http://checkout.google.com/support/sell/?hlrm if you have any questions.

Thank you for using Google Checkout!

The Google Checkout Team

Google Inc.
1600 Amphitheatre Parkway
Mountain View, CA 94043